Tikkurila finalises first quarter of 2017 with revenue growth

Monday, 1 May 2017

Nordic paint industry professional Tikkurila has finalised the first quarter of 2017 with a rise in revenue by 5.1 percent to EUR 137.1 million (2016: EUR 130.4 million). Demand for the company's products increased particularly in the Nordic countries and Russia.

Russian ruble increased revenue

Higher sales volumes increased Tikkurila Group's revenue in the first quarter by 7 percent. Also the strengthening of the foreign exchange rates, particularly the Russian ruble, increased revenue. Unfavorable development of the sales mix and sales prices as well as divestments had a negative impact on revenue. Profitability was weakened by the cost level, which was clearly higher than in the comparison period, especially due to the introduction of the new ERP system. These costs mainly occurred at the beginning of the year when the system was being implemented step by step in several of our key markets.

Erkki Järvinen, President and CEO, says:

"Demand for our products increased in January-March, particularly in the Nordic countries and Russia. However, significant fixed expenses and other initial challenges caused by the deployment of our new enterprise resource planning (ERP) system, particularly in Scandinavia, weakened our operating profit for the first quarter. In such a situation, we prioritise reliable deliveries and customer service resources to keep customer satisfaction as high as possible.

In raw material markets, the situation remained difficult, but despite the tight market situation we managed to secure the availability of our key raw materials, such as titanium dioxide, during the first months of the year. However, raw material and packaging material prices have increased and are expected to increase even more in the months to come. As a result of this, we increased our sales prices in Russia in February, and will be implementing price increases also in other markets to compensate for the cost inflation. However, the impacts of sales price increases will materialize with a certain delay, and pricing will vary depending on the market and customer segment. We continue to improve efficiency in order to ensure our cost competitiveness.

In 2016, our market share strengthened or remained stable in all key markets with the exception of Russia where our market share decreased by approximately one percentage point,"

Guidance for 2017 intact

Tikkurila expects its revenue and adjusted operating profit for the financial year 2017 to increase from the 2016 level.